Millennium Challenge Corporation Threshold Country Program Signing Ceremony with Malawi

Remarks by Charles Sethness, Goodall Gondwe, Ambassador Jendayi Frazer, and Lloyd Pierson

September 23, 2005

SETHNESS: It’s truly an honor to be celebrating the signing of the Millennium Challenge Corporation’s second threshold agreement, a two-year $20.9 million program, with the government of Malawi.

MCC will provide Malawi with threshold program assistance to attack corruption and improve fiscal management. And I’m delighted to have all of you here as witnesses to this wonderful event.

I also want, on behalf of MCC, to congratulate the people and the government of Malawi, first for qualifying for the threshold program, and for being the first threshold country to submit a detailed plan to address the very difficult issue of corruption.

I’d like to recognize everyone who helped get us to this day, including His Excellency President Mutharika, Minister Gondwe, Ambassador Eastham and his staff in Lilongwe, Ambassador Sande and, of course, those at USAID and MCC who worked so very hard to bring us to this point.

And I’d like to extend a warm welcome to the minister, Ambassador Frazer, and Administrator Pierson, and thank you all for taking part in today’s celebration.

The threshold program is designed to assist countries to improve their performance on indicators that MCC uses to select countries to be eligible for the compact process, indicators that measure policies that will lead to poverty reduction and to growth.

In the program that we’re undertaking with Malawi, they have embarked on a very ambitious journey. The program that the country has designed is integrated and comprehensive.

It attacks corruption on a systemic level, from passing needed laws, providing training and equipment to a broad range of government agencies, to strengthening the oversight role of the national assembly, the media and civil society.

The Malawian leadership has made clear that it sees the importance to the path to economic growth and foreign investment, of reducing corruption and improving fiscal management. This program will support them in that effort.

I think none of us can expect that corruption is going to disappear in two years, but Malawi has identified a significant number of interim steps that, if they are achieved, will not only make inroads in addressing corruption, it will institutionalize the fight against it.

As Malawi moves toward implementation, we are pleased to be working with many U.S. agencies that can assist them, including experts from Treasury, Justice and, of course, the USAID, who’s going to be implementing this for us.

That’s why I’m honored now to give the podium to Assistant Administrator Lloyd Pierson.

PIERSON: Thank you very much.

Mr. Minister, Assistant Secretary, to the MCC CEO and to all the staff, the members of the delegation from Malawi, this is such an important day and also, in many ways, for me such a special day to be here with MCC and USAID, for so many friends, so many colleagues who have put so much effort into the signing that we’re going to do in just a few moments.

And, Mr. Minister, for your government, this is quite an achievement. It is not one that happens very often. It is a reflection upon the great progress that has been made in Malawi. And we look forward to even greater progress in the future. We compliment you on the democracy and good governance progress that has been made in Malawi.

The U.S. government recognizes the new government’s renewed commitment to economic and social progress in Malawi since it took office in May of 2004. Malawi was selected as an MCC threshold country in December 2004 as a result of its commitment to the Millennium Challenge Account principles of investing in people, ruling justly and promoting economic freedom.

The government of Malawi, led by President Mutharika, has taken a strong stand against corruption and uncontrolled government expenditures and their damaging effect on the development of the country and its people.

The $20.9 million two-year plan will further these efforts by pursuing three primary objectives, preventing corruption, enhancing oversight functions and building enforcement and deterrence capacity in the government.

USAID is pleased to support the government of Malawi in their design and implementation of its threshold country plan. Following completion of this agreement, USAID will assist with the procurement of the plan’s implementing partners, which will include the U.S. Department of Justice, Department of Treasury.

USAID will also support the government with the management, coordination, and monitoring and evaluation and implementation of the plan.

I’m also very thankful today that we have the new assistant secretary of state for Africa here. He is formerly director of the NSC Africa Bureau, formerly United States ambassador to South Africa and now the assistant secretary of state for Africa, Ambassador Jendayi Frazer.

FRAZER: Thank you very much, Lloyd, for the introduction.

Thank you all for being here. And I’m quite honored to be here with you. It’s indeed a pleasure to be with you to participate in a signing ceremony of Malawi’s MCC threshold country program.

I am particularly pleased to be a part of this event today, which is the first of what I hope to be many, many signing ceremonies for African countries during my tenure as assistant secretary for Africa.

I have the pleasure of introducing you today to the minister of finance to the Republic of Malawi, Minister Gondwe, Edward Gondwe, and I would like to take this opportunity before introducing him to highlight the excellent relationship that the United States and Malawi enjoy.

Just last week at the U.N. General Assembly meeting, I had the chance to discuss these bonds of friendship with the foreign minister, Katsonga, Minister Faiti, Minister Banda and the ambassador, Sande.

So it’s, indeed, a strong relationship, and I look forward to meeting, discussing and working very closely with you in the implementation of the threshold program and the compact when it comes as well.

The Millennium Challenge Account country threshold program that Minister Gondwe will sign today on behalf of the people and the government of Malawi allows us to embark on a new chapter in this relationship.

As Charles and Lloyd have said and illustrated in their remarks, this MCA threshold program is about partnership. And this agreement represents yet another step in our efforts to work with the government of Malawi toward good governance and economic prosperity. The two go hand in hand.

The plan that Malawi has designed will enhance its ability to fight corruption, improve fiscal policy and improve people’s lives. We commend Malawi and its president for these extremely important efforts.

The United States has been impressed with the self-reliance with which Malawi is investing in a brighter future for its people, including the measures it’s taking that I learned of more at the U.N. General Assembly, the measures it’s taking to deal with food and security. We are honored to partner with them to achieve these goals.

So without further ado, allow me to introduce the Honorable Goodall Edward Gondwe, the minister of finance of the Republic of Malawi. The minister had previously served as the chief economic adviser to the president of Malawi and as director of the African Department of the International Monetary Fund.

He holds a B.S. degree in economics from the University of London. He also has children living in the United States and going to school here in very prestigious universities as well. So please join me in welcoming the minister to the podium.


GONDWE: Thank you, Ambassador Dr. Frazer, Mr. Pierson, Mr. SETHNESS, distinguished ladies and gentlemen. Permit me introduce my colleagues here. I have the Honorable Joyce Banda sitting over there. I have the Honorable David Faiti, really the person who is the architect, as far as we’re concerned, on our side of this program.

I have the governor of the Central Bank of Malawi, and I have (inaudible) member of parliament (inaudible) northern region.

I am honored to be here today to sign the agreement for the threshold program for the Millennium Challenge Account on behalf of my president, His Excellency Dr. Bingu wa Mutharika, and the entire people of Republic of Malawi.

We are particularly proud and grateful to be second country to sign the agreement (inaudible). This occasion marks a milestone in the relations between United States of America and Malawi in particular, and Africa in general.

With doubling of aid to Africa and programs such as the Millennium Challenge Account the Presidential Emergency Fund for AIDS Relief, the presidents fighting malaria in Africa the administration of His Excellence President George Bush has embarked on an unprecedented vibrant foreign policy on Africa which epitomizes the generosity of the American people. We are indeed very grateful for it.

On its part, the government of Republic of Malawi is determined to drive the country out of abject poverty and improve the quality of life of its people. In this respect, the government’s development strategy is premised on fiscal discipline and zero tolerance on corruption to ensure not only market economic stability but also optimal utilization of resources.

It is in this vein that the Malawi threshold country plan focuses on interventions to build capacity, to fight corruption and ensure proper management of public finances.

Corruption is an enemy of development and prosperity. It robs the people, especially the poor, of their rights to economic well being by diverting resources away from economics and social development.

Our strategy in the country plan, therefore, focuses on the broad underlying pieces of the governance environment. It also proposes specific ways in target institutions to improve systems and procedures and install mechanisms of restraint.

Specifically, we will undertake 18 interventions over a two-year period of the threshold program, which includes building legal skills capacity, increasing the effectiveness of the law enforcement agencies, strengthening added capacity and building (inaudible) abilities.

Apart from addressing corruption, the program is also intended to improve the country’s credit rating. We are convinced that if corruption is stemmed and finances are well managed, the country’s credit rating will be improved.

The signing of this program could not only have—could not have come at a better time than this, when the International Monetary Fund has just approved a three-year arrangement for Malawi under the Poverty Reduction and Growth Facility.

This is in recognition of the positive steps being undertaken by our—to improve the country’s economy which had significantly deteriorated at the time when President Bingu wa Mutharika took over power in May 2004.

I want to assure the government of United States through you, Ambassador Frazer, that as a government we are determined to enhance the welfare of our people in all aspects. We have therefore decided to take up the challenge by the United States, et al. Give us two years, and you will see discernible change in Malawi.

Lastly, let me once again thank the government and the people of United States of America for their continued generosity.

In particular, I wish to thank officials from the Millennium Challenge Corporation and United States Agency for International Development; the Department of State, including the American Embassy in Lilongwe, have done a lot to encourage us in this endeavor; and everybody else who made this day possible.

May God bless Malawi and the United States of America. Thank you very much.